WAL-MART FIRES THREE OFFICERS

KATHERINE BOWERS / Additional reporting: Jon Springer

BENTONVILLE, Ark. -- Wal-Mart Stores last week fired three company officers, including the senior executive responsible for its 3,000 U.S. stores, for violating "well-known company rules," spokeswoman Mona Williams said.

Williams declined to reveal the names of the officials, or specify the infractions. Yet the Benton County Record, citing unnamed sources, reported that James H. Haworth, executive vice president, operations, Wal-Mart Stores division, was among those dismissed, along with Terry Pharr, a senior vice president, and Ken Reese, director of operations for Wal-Mart's Tire & Lube Express.

Wal-Mart, the world's biggest retailer, defines "officer" as positions of vice president and above. It has 200 such employees in a workforce of more than 1.6 million. The firm also fired four non-officer employees, Williams confirmed. Most of the fired employees worked at Wal-Mart's headquarters in Bentonville.

The decision, less than two weeks before Christmas, comes during a rocky holiday selling season for Wal-Mart, which has struggled with pricing and lackluster merchandise. Disappointing Black Friday sales caused the firm to lower its December same-store sales projections to a 1% to 3% gain from 2% to 4%, embark on a new ad campaign, and slash prices on key items. While Wal-Mart's recent sales updates indicated its food sales have been strong, overall store traffic and general merchandise sales have been disappointing.

Haworth spoke recently at a Wal-Mart investor conference, explaining how the discounter was taking a more flexible approach to grow its supercenter business.

A.G. Edwards retail analyst Bob Buchanan said in a research note that the terminations were "of concern to us inasmuch as we view Jim Haworth as a high-caliber executive."

The pre-holiday timing "couldn't be worse," Buchanan said in an interview. "They are really struggling this holiday. The merchandise is dull, including home fitness and apparel. They've also got some problems at the front of the store. They need to be checking people out faster."

Although Williams would not confirm Haworth's departure, his biography was removed from the senior officer profile section of Wal-Mart's Web site on Wednesday. Haworth could not be reached for comment.

"Once the infractions came to light, we dealt with it quickly," Williams said. "This is not a common action."

Williams said no timeline had been established for replacing those who had been dismissed, but indicated that the company had "depth" in its executive ranks.

A 20-year veteran, Haworth started at Wal-Mart as an assistant manager after graduating from Central Missouri State University in 1984. He got the executive vice president title in 2001, which put him in charge of about 3,000 domestic stores.

Although the firings are unusual in recent history, the company has weathered worse. When Wal-Mart founder Sam Walton parted company with his second-in-command, Ron Mayer, in 1976, roughly a third of the company's senior management followed Mayer out the door. Company insiders dubbed the event the "Saturday night massacre," and in his autobiography, Walton wrote "things looked pretty grim."

The company has hit another bumpy stretch in the last 18 months, which have seen relatively sluggish same-store sales gains coupled with high-profile fights to get stores built in key expansion markets, such as Los Angeles. Wal-Mart has embarked on a public relations campaign to depict the company in a positive light after a spate of lawsuits, including the largest-ever gender discrimination class-action case.